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Here's EY! If you like big firms, you should feel warmly about Ernst & Young. The firm is more than a century old, and is the product of a succession of mergers that started in the 1950s. The current incarnation of Ernst & Young was created from a 1989 merger of two members of what used to be called the Big Eight professional services firms - Arthur Young and Ernst & Whinney. In 1998, Ernst & Young had 82,000 employees in 132 countries around the world. The rising star of consulting Ernst & Young currently ranks as the second-largest integrated professional services firm in the U.S. Ernst & Young Consulting is a big part of this prominence, with 20,000 employees. In the past two years, growth at Ernst & Young Consulting has far outstripped that of the consulting industry as a whole - the consultancy has enjoyed a 35 percent increase in revenue per year for the last few years. In 1996, management consulting revenue exceeded $2 billion. Bridging the continental divide Late in 1999, rumors started swirling that French consulting giant Cap Gemini was in talks to acquire E&Y's consulting unit. Finally, in February 2000, the two companies agreed on a price - 11.5 billion euros, or $11.2 billion. Expected to close in late May 2000, the deal will boost nearly double Cap's revenue and increase their worldwide employment by almost 20,000. By selling its consulting unit, Ernst & Young hopes to avoid SEC scrutiny of conflicts of interest between its businesses; industry watchdogs have repeatedly argued that Big 5 firms have let accounting irregularities slide in order to maintain their consulting contracts. No Bert No doubt this strong growth is influenced by innovations like "Ernie," a popular online consulting service for small businesses. Ernie members pay a membership fee, and then can submit their queries to official Ernst & Young consultants via e-mail. Ernst & Young draws on its consulting expertise, and Ernie-users soon get a reasoned and usable answer. Ernst & Young Consulting also uses Ernie to feature "Trend Watch," a survey of most common concerns and questions. Another of E&Y's consulting innovations is the Ernst & Young Entrepreneurial Consulting group. While most of Ernst and Young's clients are big bruisers that earn over $100 million yearly, Entrepreneurial Consulting takes on smaller businesses hungry to grow. Comic relief Ernst & Young takes a novel approach to disseminating company-wide news: a minister of comedy named David Levin. The 26-year-old is in charge of quarterly SuperFriday Broadcasts, which provide updates to E&Y's consultants about what everyone else in the company is up to. The 90-minute shows are broadcast live from a different city each quarter, and can involve anything from a game show to a musical extravaganza. Consulting layoffs Despite the overall trend of expansion and record revenues in the consulting business, some difficulties have sprung up along the way. In July 1999 Ernst & Young laid off approximately 500 of its consultants, representing about 6 percent of the firm's 8,200 U.S. consulting staffers.
Darn Ernst & Young tried to grow bigger in 1998 by merging with its competitor KPMG Peat Marwick (as it was then called), another Big Six firm. The planned merger, however, foundered on the shoals of European regulatory concerns. (It didn't help matters that the mergers of competitors Price Waterhouse and Coopers & Lybrand was also pending at the time.) Costly legal woes In December 1999, E&Y finally settled one part of a long-running suit brought against it by Cendant, a New York-based marketing and franchising firm that owns franchising rights to brands like Avis car rental and Ramada hotels, for $335 million. In its negligence suit, Cendant alleged that Ernst & Young's accounting services had failed to detect accounting fraud at a firm that Cendant later acquired. E&Y will also have to settle a second suit brought against it by Cendant in Newark, NJ federal court. Tax advice for the world The financial services firm began supplying customized tax information to clients in 13 countries through its international Online Tax Advisor service. The service debuted in July 1999 with US-only advice, expanded to 13 countries a year later, and expected to offer six additional countries by fall 2000.
Ernst & Young sets its hiring goals in the spring of each year, organizing its strategic planning and forming "school teams." Each campus has a Campus Ambassador and Campus Captain. Beginning in 1998, each campus team has been assigned its own budget. The firm has identified several "critical success factors," which include "intellectual competence, flexibility, communication skills, teamwork and interpersonal skills, leadership, motivation, time management, and technical competence." Each interviewer focuses on one or two of these factors. The typical format to identify these skills goes as follows – "Tell me about a situation where you used your [skills in one of these factors]. What was your role? What did you do? What happened? What did you learn from this experience?" The candidate is also taken to lunch and evaluated during the meal on cultural fit and interest in Ernst & Young. In Ernst & Young's consulting competency, case interviews are used in the Strategic Advisory Services Group. Neither brainteasers nor guesstimates are employed, insiders tell us. Some offices have "sell days" for MBAs, including the New York and Chicago offices. At these sell days, the firm "discusses the Accelerated Solutions Environment, our unique approach to decision making." The attendees are taken through exercises where they discuss the sort of workplace they want to be. After a tour of E&Y, at the end of the day, comes the "breakthrough decision," when candidates learn how to break a wooden board with their hand, "meant to mirror their breakthrough career decision, that they should work at Ernst & Young." Firm-wide, about half of offerees opt to work at Ernst.
Conservatism still rampant Ernst & Young's size brings both advantages and disadvantages. On the less positive side, some consultants indicate that Ernst possesses a conservative culture. "I think it's a very conservative firm in terms of the way management acts, in the way projects are handled," says one consultant disapprovingly. Another contact notes: "It's a large firm, and if you're ambitious, it can be tough sometimes." The same contact continues: "[Ernst is] great if you want to settle down, but if you want to be making the most money of anyone your age, or if you want to do everything that interests you, you might get frustrated. It's more structured. You get assigned to something and that's your project - hopefully you'll like it, 'cause that's what you'll be doing for a while." Note however, that the rigid structure reported by those working in U.S. offices doesn't necessarily exist in other countries. Going abroad? E&Y insiders tend also to comment on the firm's increasing international outlook and encouraging attitudes towards going abroad. One contact notes that 30-40 percent of his office actively chose international assignments, and explains: "It's really encouraged, I guess because of globalization, and they know that a lot of these people would just leave if they couldn't go abroad. It's very easy to transfer between countries." One contact marvels: "On my first business trip ever, I went to Rio!" Another contact on the consulting side recalls an extraordinary assignment: "I went all over the world - you name it, I was there." Lesser pay Pay doesn't seem to be one of E&Y's strong suits. "As for compensation," one contact tells us, "the general pattern is that you make a fair salary, but nothing spectacular." The same individual notes however, that the pay is "good lifestyle money," and that "you'll never have to beg on the floor of a car dealership for a loan." One former E&Y consultant, however, notes that "to get a big jump in pay, it just would have taken too long." Another ex-consultant says: "The pay was not going to do it for me." Note that, in consulting, there is no overtime and working all night "comes straight out of your salary." E&Y seems to be taking steps to increase its compensation package. The firm, it is rumored, plans to institute a better bonus system to lure candidates away from bonus-happy jobs in investment banking and elsewhere. Another contact reminds us: "[E&Y is] recruiting at the top business schools, so they must be willing to pay more." Consulting festivities Insiders report frequent lunches and regular soirees with colleagues. When asked about firm-organized activities, one consultant responds with a rather unsettling comparison: "There aren't as many as Andersen. I've talked to people there, and it almost seems like they want to make their employees a bunch of alcoholics." While perhaps more subdued than its competitors, Ernst & Young has its debauched spots. "There's the training and that's a blast," reports one consultant who elaborates: "Every division has their own form of training. Basically you try and stay awake all day during some kind of class, and then you go out and drink all night." Billables are a drag One source of complaints from consultants is the firm's "utilization" goals, targets that require consultants to bill 80 percent of all hours to clients. The goals are particularly pertinent for individuals at the lower levels, who focus more on project work and less on business development. While not as rigid or demanding as billable hours targets at law firms, consultants still feel the pressure. "They want you to bill those hours!" gripes one consultant. Another consultant levels particular criticism at the utilization goals: "If you're in consulting, when you're working on projects, there's a lot of down time, and then there's the recruiting and other non-chargeable time. Basically, the expectation is that you'll bill out eight hours a day and then do all the other stuff later, and the fact is that the people with the highest utilizations get noticed."
Recruiting
Arthur Andersen;Andersen Consulting;Deloitte & Touche;KPMG; PricewaterhouseCoopers More Company Profiles For more career information, go to Vault.com ©2000, Vault.com Inc
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